My Company

By Arthur D. Postal

The medical loss ratio provision of the Patient Protection and Affordable Care Act is “working the way we hoped it would,” Sen. John D. Rockefeller IV, D-W. Va., said this week at a contentious Senate hearing on the MLR rules.

“The minimum medical loss ratio is a very simple idea, but it appears to have had a powerful, and very positive, effect on the health insurance market,” Rockefeller said at the Wednesday hearing, which was organized by the Senate Commerce, Science & Transportation Committee. Rockefeller chairs the committee.

Republicans used the hearing as a vehicle to challenge every aspect of PPACA.

Sen. John Thune, R-S.D., the highest ranking Republican on the committee, said some experts believe the PPACA MLR rules could actually increase health insurance premiums and reduce the level of competition.

The MLR system puts decisions about health care activities in the hands of the government, rather than letting consumers and state insurance regulators make the decisions, Thune said.

The U.S. Department of Health and Human Services’ MLR regulations may “undermine efforts by insurers to prevent fraud and abuse, including efforts to prevent the delivery of inappropriate or unnecessary services that may harm consumers,” Thune said.

The PPACA MLR provision requires individual and small group insurance plans to spend 80 percent of premiums on health care and quality improvement efforts. Large group plans must achieve an MLR of 85 percent. Plans that fail to meet the MLR targets through ordinary operations must use rebates or other means to make up the difference.

PPACA also requires each insurer to publicly disclose its MLR data, including premium income and expenditures on medical claims, for each state’s individual, small-group, and large-group market.

Rockefeller said consumers and businesses have received $1.6 billion in rebate checks for 2011 and 2012, and will get more cash back later this year, when insurers mail the rebate checks for 2013.

The data disclosure requirements and the changes health insurers have made to reduce overhead and avoid paying rebates have also helped consumers, Rockefeller said.

Former Cigna executive and whistleblower Wendell Potter, who now works at the Center for Public Integrity, testified at the hearing that the “greatest benefit” of the MLR has been for consumers who buy individual and family coverage. He cited a Kaiser Family Foundation analysis indicating that the average MLR in the individual market increased to 83 percent in 2012, from 78 percent in 2010.